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GuruFocus has detected 5 Warning Signs with Republic Services Inc $RSG.
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Republic Services Inc (NYSE:RSG)
Beneish M-Score
-2.67 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Republic Services Inc has a M-score of -2.67 suggests that the company is not a manipulator.

RSG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.03   Max: -0.5
Current: -2.67

-3.03
-0.5

During the past 13 years, the highest Beneish M-Score of Republic Services Inc was -0.50. The lowest was -3.03. And the median was -2.71.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Republic Services Inc for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 1.0031+0.528 * 1.0222+0.404 * 0.9958+0.892 * 1.0299+0.115 * 0.9875
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9589+4.679 * -0.0501-0.327 * 1.0064
=-2.67

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $995 Mil.
Revenue was 2379.2 + 2409.3 + 2350.7 + 2248.6 = $9,388 Mil.
Gross Profit was 913.9 + 932.6 + 910 + 867.2 = $3,624 Mil.
Total Current Assets was $1,285 Mil.
Total Assets was $20,630 Mil.
Property, Plant and Equipment(Net PPE) was $7,589 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,070 Mil.
Selling, General & Admin. Expense(SGA) was $975 Mil.
Total Current Liabilities was $1,812 Mil.
Long-Term Debt was $7,653 Mil.
Net Income was 189.5 + 85.6 + 180.8 + 156.7 = $613 Mil.
Non Operating Income was -7.2 + -194.9 + 1.6 + -0.7 = $-201 Mil.
Cash Flow from Operations was 488.2 + 515.3 + 412.8 + 431.5 = $1,848 Mil.
Accounts Receivable was $963 Mil.
Revenue was 2290.2 + 2344 + 2311.4 + 2169.4 = $9,115 Mil.
Gross Profit was 886.5 + 953.8 + 891 + 865.1 = $3,596 Mil.
Total Current Assets was $1,230 Mil.
Total Assets was $20,536 Mil.
Property, Plant and Equipment(Net PPE) was $7,553 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,050 Mil.
Selling, General & Admin. Expense(SGA) was $988 Mil.
Total Current Liabilities was $1,835 Mil.
Long-Term Debt was $7,527 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(994.8 / 9387.8) / (962.9 / 9115)
=0.10596732 / 0.10563906
=1.0031

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(3596.4 / 9115) / (3623.7 / 9387.8)
=0.39455842 / 0.38600098
=1.0222

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1284.5 + 7588.6) / 20629.6) / (1 - (1230.3 + 7552.8) / 20535.9)
=0.56988502 / 0.57230509
=0.9958

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=9387.8 / 9115
=1.0299

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(1050 / (1050 + 7552.8)) / (1070.2 / (1070.2 + 7588.6))
=0.12205328 / 0.1235968
=0.9875

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(975.4 / 9387.8) / (987.6 / 9115)
=0.10390081 / 0.10834888
=0.9589

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((7653.1 + 1812) / 20629.6) / ((7527.4 + 1834.8) / 20535.9)
=0.45881161 / 0.45589431
=1.0064

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(612.6 - -201.2 - 1847.8) / 20629.6
=-0.0501

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Republic Services Inc has a M-score of -2.67 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Republic Services Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.98122.73280.41120.96910.98581.02241.02690.99880.99951.0031
GMI 1.01141.07230.84120.99261.01491.05941.0141.05330.90981.0222
AQI 1.00071.40730.99890.99540.99340.99510.98460.99690.99670.9958
SGI 1.03441.16022.22490.98871.01060.99091.03681.04591.03541.0299
DEPI 0.97282.47750.43210.96211.00521.01020.99060.98790.99010.9875
SGAI 0.96281.19440.91030.98570.95191.04750.96121.03071.03630.959
LVGI 1.01330.9980.93640.95631.02370.99230.98041.01071.0321.0064
TATA -0.0862-0.0219-0.0394-0.0397-0.0497-0.0425-0.0481-0.0489-0.0453-0.0501
M-score -2.86-0.51-2.23-2.70-2.71-2.64-2.63-2.65-2.73-2.67

Republic Services Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.00360.99871.01760.9970.99650.99960.97230.99361.00111.0031
GMI 0.96791.05321.01081.04181.01750.90980.940.94150.97061.0222
AQI 0.99090.99690.99040.98370.98790.99670.99760.9981.0020.9958
SGI 1.04961.04591.04711.04231.03881.03541.03361.02851.0271.0299
DEPI 0.97780.98791.00511.00531.00450.99010.97320.97520.9770.9875
SGAI 0.93951.03071.0491.07621.07181.03631.01811.01590.99320.9589
LVGI 0.98661.01071.03061.02641.03951.0321.00851.01391.01711.0064
TATA -0.039-0.0489-0.0506-0.0538-0.0541-0.0453-0.0429-0.0436-0.0448-0.0501
M-score -2.62-2.65-2.67-2.70-2.72-2.73-2.72-2.71-2.69-2.67
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